U.S. NFP Falls Short of Expectations with 151K Jobs – Gold and silver Bounce Back

The U.S. non-farm payroll fell short of market expectations with 151K jobs in August: The ADP estimated a gain of 177K jobs while the market expect a gain of 180K. The growth in wages, was also lower than expected as wages increased by only 3 cents, month over month. The rate of unemployment remained flat at 4.9%. The U.S. dollar rose against the majors while gold and silver rallied. Let’s breakdown this report:  

Not only the headline unemployment rate remained flat, the U6 unemployment measurement, a broader measure of unemployment, also didn’t move and maintained its rate at 9.7%. In terms of revisions, there was a total downward revision of 1K for July and June combined.

nfp and unemp Sep 2016

Source: BLS

In August, the rate of U.S. unemployment was 0.2 percent points below the rate recorded in August 2015.

The number of unemployed persons (7.849 million) rose by 79K in August compared to the previous month. And the civilian labor force also increased by 176K. So there was a rise in number of people participating in the labor force and in the number of unemployed. In the end, the participation rate remained flat at 62.8%.

Finally, wages rose in August compared to July – the hourly earnings reached $25.73 per hour — a gain of 3 cent or 0.1%, month over month –lower than expected (exp. were for 0.2% gain); wages grew at an annual rate of 2.4%, year on year – a slower pace than in the previous month.

Takeaway

The labor market is still improving but this recent NFP report could be enough to hold off the Fed from considering raising rates in the near term and help Chair of the FOMC Yellen to postpone the rate hike talk to the end of the year. For now this could be the news needed for bring back up gold and silver prices and keep pushing them upward.

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